Fixed-rate mortgage rates held comparatively stable this week leading up to the June 24 to June 25 Federal Reserve policy committee meeting, according to Freddie Mac Chief Economist Frank Nothaft.
"ARM rates, which are typically tied to short-term instruments, rose slightly due to market uncertainty over how the Fed might respond," he said.
Specifically, 30- and 15-year fixed mortgage rates rose three and two basis points, respectively, to 6.45% and 6.04%, according to the GSE's weekly mortgage rate survey.
Meanwhile, five-year hybrid rates gained 10 basis points to 5.99% and one-year ARM rates rose to 5.27% from 5.19%.
For the month of June, 30-year fixed mortgages averaged 6.32%, up 29 basis points from May's average.
Higher interest rates, low consumer confidence, tighter underwriting, and poor housing conditions are affecting application activity and with further increases this week, applications are expected to remain stalled.
Yesterday, the Mortgage Bankers Association reported a 12% decline in the Refinance Index to 1212 for the week ending June 20, which is the lowest it has been in seven years.
So far this month, the Refinance Index is down 31% on average from May's average. This suggests that prepayment speeds in July and August could be slower than what is currently predicted or down 3% to 4%.